FMCG growth slower in Q1 on inflation, lower rural purchase

The market research firm said growth would be the same as forecast in 2019 and will be determined by macro-economic factors including inflation, GDP growth and rural consumption.

NEW DELHI: The fast moving consumer goods industry grew at a slower pace in the first quarter of 2019 compared to the previous quarter, market research firm Nielsen said, as a higher rate of inflation and slowing rural purchases pulled down growth.

The sector grew 13.6% in value terms, lower by 2.3 percentage points from the previous quarter, Nielsen said, with the overall drop in rural growth mainly driven by a slowdown in packaged foods.

Essential items such as packaged atta, refined oil, spices and impulse purchases including biscuits, chocolates and confectionery fell, with the magnitude of the slowdown greater for smaller players in rural areas, it added. Volume growth, at 9.4% in the January-March quarter, contributed 69% to overall value growth, Nielsen said.

The market research firm said growth would be the same as forecast in 2019 — in the range of 11-12%, which is 2 percentage points lower than that in 2018 — and will be determined by macro-economic factors including inflation, GDP growth and rural consumption. Rural purchases will depend on rainfall, non-farm income, and disbursement under the employment guarantee scheme, it said.